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There's nothing you can do

  
  Education
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You might be at a stage of feeling very frustrated with yourself.

I know what this feels like – you begin to marvel at your own lack of discipline and ability to do what you know. It’s like “Arrgh! Why can’t I just WAIT for the damn setup?! Why am I such a screw up at this?!”

Speaking from experience, it’s frustrating because you just want to get on. You have plans and goals and now you see that your own idiocy is preventing you from making any progress towards them. All I can say is that there’s nothing you can do about this period except keep going and wait for it to pass… It’s deeply ingrained. You have to trade through it; six months, a year, two years… Grit your teeth and plow on.

In a way, you have to relax into your own ability to seemingly pick every wrong move in the market. Just accept it. Providing you are not losing big money, you CAN relax into it. The good news is you are in fact building up a tolerance to taking losses during this period – you ARE actually developing a skill. It’s called “risk tolerance.”

If you’re still in that “God dammit!” phase then do this: just keep losing and losing, but begin to try to take the losses without any emotional reaction what so ever and move immediately to the next trade.

Once you can do this, you then move on to learning to let go of your need to have success NOW. This combines with learning to do nothing in the market – learning to wait. Why not wait, you’re gonna lose anyway right? So you might as well wait…

Now you’re building up patience. This is a foundation that leads to a little magic further down the track, when you get to the point where you see that you could take any system and trade it properly to discover its true potential. All those millions of methods you tried for 3 days and abandoned in disgust now sit there like a pile of spare parts in the bike shed. You become interested in them again – there could actually be a few decent ideas amongst that lot.

So learn to lose.
Then learn to wait to lose.

You will be building risk tollerance and patience. There are more steps after that, but there is no way to skip this process, it has to be gone through by all.

10 Points -Why Traders Lose Their Discipline

  
  Education
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  • Environmental distractions and boredom cause a lack of focus – All of us have limits to our attention span and these are easily taxed during quiet times in the market;
  • Fatigue and mental overload create a loss of concentration – The demands of watching the screen hour after hour make it difficult to be sharp, creating fatigue effects that are well-known to pilots, car drivers, and soldiers;
  • Overconfidence follows a string of successes – It is common for traders to attribute success to skill and failure to situational, external factors.  As a result, a string of even random wins can lead traders to become overconfident and veer from trading plans–especially by trading too frequently and/or trading excessive size;
  • Unwillingness to accept losses – This leads traders to alter their trade plans after trades have gone into the red, turning what were meant to be short-term trades into longer-term holds and transforming trades with small size into large trades by adding to losers; (more…)

Top 10 Reasons Traders lose their discipline !!!

  
  Education
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artimg53

Losing discipline is not a trading problem; it is the common result of a number of trading-related problems.
Here are the most common sources of loss of discipline, culled from my work with traders:

  1. Environmental distractions and boredom cause a lack of focus.
  2. Fatigue and mental overload create a loss of concentration. (more…)

6 Trading Rules for Traders

  
  Education
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  • Devise a trading plan and follow it. I believe the best trading strategy is the one you’ve been able to review, back test and fits your trading style and risk tolerance. It is important that you know all vitals of the trade (the entries, possible exit targets, and where your stops may be prior to placing your trade orders.) By having a concrete plan, you assist in removing the emotion out of the equation.
  • Stick with the trend!There’s a reason why the cliché “The trend is your friend” exists. It’s because it’s true! Successful traders will always tend to follow the trend when trading. Remember, if you trade with the trend, you have the majority of the market on your side.
  • Control your emotions.This by far is the hardest thing for any trader to do. After all, it has been said that emotional control is 90‐95% of trading and the rest is your strategy. Therefore, I can’t say it enough times… Figure out a way to trade without emotions. To help with this matter, I believe it’s vital that you trade only with capital you can afford to lose. If you are using money that you need to pay your bills, you will almost certainly get emotional about every trade you make. In addition, I found that the more confident you are about your trading strategy, the better the chances are that you can trade with little emotional stress.
  • Record your trades in a trade journal.When I first started trading, I was a bit lax about this concept. But once I started doing recording my actions, I found that I was able to identify my strengths and weaknesses. I take about 30‐45 minutes each day after I’m finished trading for the day to review my trades and to analyze any disconnect from my original plan. This helps me strengthen my conviction of my plan.
  • Never trade unless the signal is clear.There are times when the market can confuse you. For me, confusion is a clear cut signal to keep out of the market. I always want my trades to be high probability signals. My signal has generated a winning percentage of more than 70%. So if I’m uncertain about a signal why would I want to take it, knowing that the chance of it winning is more like a coin toss or less? To me, that is gambling… and I do not consider myself a gambler.
  • Never make trades because you are bored. Sitting on the sidelines waiting for your next trade signal to line up can be very unsettling. Many traders have learned that trading out of boredom can blow out your account in a hurry. For me, trading out of boredom while failing to follow your trading signal is gambling.

Rules for Bear Market

  
  Education
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1. Good news in a bear market is like smoke in the breeze (i.e., soon dispersed). Don’t buy into upgrades or analyst recommendations. Analyst “upgrades” or recommendations can kill you.Every person reading this has access to some kind of trading platform, trading tools or systems that afford instant access to the financial markets. Good news like upgrades in bear markets typically has about five minutes of fame.

 

2. Bear markets are not a time to learn how to “day trade” in an effort to recoup losses (no matter how many times you hear that “this is a traders’ market”).

 

3. Accumulation days (there may be three or more in a row) are shorting opportunities, but resist being aggressive until the S&P 500 shows a 3- and 5-day moving average bearish cross. (Remember that it’s 50% market, 25% sector and 25% stock as far as direction, but some could argue in markets it’s 75% index, 15% sector and 10% stock.)

 

4. Chart patterns (unlike ice cream) come in just two flavors: continuations and reversals. Reversal patterns mostly form in weak trends. If the trend that the market or stock you are watching has been strong, then chances are that any pause is just a consolidation before the next leg down.

 

5. There is no such thing as “safe sectors.” Sure, each bear market brings sector rotation. But make sure if you are playing this game that you don’t have the flexibility of wood. And when the music stops, quickly find a chair!

That is, you must keep a flexible mindset so that you are able to change with the markets. The best traders are those who are nimble and approach the markets without bias.

 

6. Your stop-losses are YOUR stop-losses. The pain of being down 8% in a bull market is no different than being 8% wrong in a bear. If your risk tolerance requires you stopping out at 8%, then be consistent in any market you trade, but trade “with the primary trend.”

It takes greater emotional balance to trade a bear than a bull. So, always manage your risk — just remember that, in the markets, your money is always at risk.

Great traders manage emotions and risk. This makes them great. YOU know your risk tolerance and YOU control what happens between the “keyboard and chair.”

 

7. Bear markets are generally slow-moving affairs. However, stocks in bear markets can move much faster than you think (hence the reason that volatility rises drastically). But the “time” we spend in a bear is what everyone needs to keep in perspective. Bear markets last much longer than most are willing to wait. (more…)

Top Ten Reasons Traders Lose Their Discipline

  
  Education
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Losing discipline is not a trading problem; it is the common result of a number of trading-related problems. Here are the most common sources of loss of discipline, culled from my work with traders:

10) Environmental distractions and boredom cause a lack of focus;

9) Fatigue and mental overload create a loss of concentration;

8) Overconfidence follows a string of successes;

7) Unwillingness to accept losses, leading to alterations of trade plans after the trade has gone into the red;

6) Loss of confidence in one’s trading plan/strategy because it has not been adequately tested and battle-tested;

5) Personality traits that lead to impulsivity and low frustration tolerance in stressful situations;

4) Situational performance pressures, such as trading slumps and increased personal expenses, that change how traders trade (putting P/L ahead of making good trades);

3) Trading positions that are excessive for the account size, created exaggerated P/L swings and emotional reactions;

2) Not having a clearly defined trading plan/strategy in the first place;

1) Trading a time frame, style, or market that does not match your talents, skills, risk tolerance, and personality.

5 Keys to Trading Fear

  
  Education
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1. Trade With a Clear Mind

Do not make emotional decisions. Realize that emotions are emotions. What differentiates the successful traders from others is how we recalibrate our reactions to our emotions.

I was watching an interview with a surfer. The interviewer asked him what he does when a big surf comes and he goes underwater. The surfer said it was simple. “If I panic, I only have 3-5 seconds of air to breathe. If I stay calm, I have 45-60 seconds of air.“

What does surfing have to do with trading? If you panic and operate from a place of fear, you could lose all of your capital. However, if you take a moment and think about your strategies, you can have much better results.

2. Look at Your Portfolio Objectively

Think about your portfolio as if you are looking at the portfolio of your best friend. How would you advise him/her? (more…)

Top Ten Reasons Traders Lose Their Discipline

  
  Education
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discipline-a

Losing discipline is not a trading problem; it is the common result of a number of trading-related problems. Here are the most common sources of loss of discipline, culled from my work with traders:

10) Environmental distractions and boredom cause a lack of focus;

9) Fatigue and mental overload create a loss of concentration;

8) Overconfidence follows a string of successes;

7) Unwillingness to accept losses, leading to alterations of trade plans after the trade has gone into the red;
6) Loss of confidence in one’s trading plan/strategy because it has not been adequately tested and battle-tested;
5) Personality traits that lead to impulsivity and low frustration tolerance in stressful situations;
4) Situational performance pressures, such as trading slumps and increased personal expenses, that change how traders trade (putting P/L ahead of making good trades);
3) Trading positions that are excessive for the account size, created exaggerated P/L swings and emotional reactions;
2) Not having a clearly defined trading plan/strategy in the first place;
1) Trading a time frame, style, or market that does not match your talents, skills, risk tolerance, and personality.

Wisdom Quotes adapted to Trading

  
  Education
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2010-12-18

 

Here are some famous quotes adapted to trading.

A man should look for what is, and not for what he thinks should be.
Albert Einstein

A trader should look at a chart for what it is, and not for what he want it
to be.

A person who never made a mistake never tried anything new.
Albert Einstein

A trader who has never lost, is not a trader yet.

All men by nature desire knowledge.
Aristotle

All traders by nature desire profitable trades.

Bring your desires down to your present means. Increase them only when your increased means permit.
Aristotle

Trade within your ability and risk tolerance. Increase size and frequency when ability and tolerance permits it.

Being ignorant is not so much a shame, as being unwilling to learn.
Benjamin Franklin

Losing because of a new situation is fine, losing again is the beginning of the end.

By failing to prepare, you are preparing to fail.
Benjamin Franklin

The easiest thing to do is prepare. If you don’t, on behalf of the other market participants, we thank you.

Creditors have better memories than debtors.
Benjamin Franklin

You will always remember the trades that could have been and forget about the risks that were involved.

Applause is a receipt, not a bill.
Dale Carnegie

Your trading statement is the receipt, not your spreadsheet.

First ask yourself: What is the worst that can happen? Then prepare to accept it. Then proceed to improve on the worst.
Dale Carnegie

The more you mentally prepare and except loss the less chance it occurs.

A pair of powerful spectacles has sometimes sufficed to cure a person in love.
Friedrich Nietzsche

A trade is a not the girl you want to take home to mother, act accordingly.

After coming into contact with a religious man I always feel I must wash my hands.
Friedrich Nietzsche

After talking to a guru or anyone with the holy grail, I always take a hot shower, burn the clothes I was wearing, and drink them out of my mind.

Ah, women. They make the highs higher and the lows more frequent.
Friedrich Nietzsche

Focusing on the result (making money), makes winning more fun but less frequent.

Always do whatever’s next.
George Carlin

Move on, understand what happened in the past but do not have an emotional attachment to it.

Fighting for peace is like screwing for virginity.
George Carlin

Fighting yourself is like robbing your own bank.

A good plan violently executed now is better than a perfect plan executed next week.
George S. Patton

A trading plan is just words until you act on it.

Always do everything you ask of those you command.
George S. Patton

Educators talk in best practices, if you teach it, do it.

I don’t measure a man’s success by how high he climbs but how high he bounces when he hits bottom.
George S. Patton

The easiest thing to handle is winning, but trading doesn’t start until you lose.

If everyone is thinking alike, then somebody isn’t thinking.
George S. Patton

If every trader is the long there is no money in being long unless you were first.

Be courteous to all, but intimate with few, and let those few be well tried before you give them your confidence.
George Washington

Don’t marry a trade but if you must make sure you have a prenup.

Experience teaches us that it is much easier to prevent an enemy from posting themselves than it is to dislodge them after they have got possession.
George Washington

Your habits are easily formed but be aware they are hard to pay for.

A man is rich in proportion to the number of things he can afford to let alone.
Henry David Thoreau

Just because the market is open does not mean you have to trade. Cash is a position too.

All men are children, and of one family. The same tale sends them all to bed, and wakes them in the morning.
Henry David Thoreau

Your worth as a trader is today’s trading statement, it is re-calculated daily.

All this worldly wisdom was once the unamiable heresy of some wise man.
Henry David Thoreau

The trading genius was previously an idiot or is closer to being one tomorrow.

A bore is a person who opens his mouth and puts his feats in it.
Henry Ford

All trading results are insignificant unless it is your last.

Coming together is a beginning; keeping together is progress; working together is success.
Henry Ford

Having trading discipline is the beginning; keeping discipline is the progress; staying discipline is the success.

Be candid with everyone.
Jack Welch

Be honest with yourself, if or when you fail the change of direction will not kill you.

Change before you have to.
Jack Welch

The market will force you to change if you don’t and it is painful and disheartening.

Control your own destiny or someone else will.
Jack Welch

Put yourself in the best position or you will not have a position come tomorrow.

Face reality as it is, not as it was or as you wish it to be.
Jack Welch

Bend your view to the charts, not the charts to your view.

Even Castles made of sand, fall into the sea, eventually.
Jimi Hendrix

If the base of your trading was built on weak grounds, it is not a matter of if you fail but when you fail.

I try to use my music to move these people to act.
Jimi Hendrix

I place my entries and exits where I am assured people will have to act.

I used to live in a room full of mirrors; all I could see was me.
Jimi Hendrix

You are not the market, but some days you are a part of it.

Abuse of words has been the great instrument of sophistry and chicanery, of party, faction, and division of society.
John Adams

Trading can be simple if you let it. The stakeholders want to convince you otherwise, making their accomplishment and pocketbooks larger.

In politics the middle way is none at all.
John Adams

Indecision will lead to failure even if it does not result in losing money.

Efforts and courage are not enough without purpose and direction.
John F. Kennedy

Any trader can take risk a smart trader can use it to their advantage.

Forgive your enemies, but never forget their names.
John F. Kennedy

Move past your losing trades don’t erase them.

I don’t think the intelligence reports are all that hot. Some days I get more out of the New York Times.
John F. Kennedy

Understand from whom and why you are getting “hot” tips.

Adversity is the state in which man mostly easily becomes acquainted with himself, being especially free of admirers then.
John Wooden

Losing is lonely, but it can be the easiest way to get to know yourself.

Don’t measure yourself by what you have accomplished, but by what you should have accomplished with your ability.
John Wooden

If you make money by making a mistake, it is loan with a very high interest rate.

Failure is not fatal, but failure to change might be.
John Wooden

Losing only matters if you lost because of a lesson you were already taught.

If you don’t have time to do it right, when will you have time to do it over?
John Wooden

Develop a plan before you trade or do it later with less cash and more frustration.

History repeats itself, first as tragedy, second as farce.
Karl Marx

A result is rarely an aberration, never treat it as one.

Be content to seem what you really are.
Marcus Aurelius

Find yourself and trade that way.

Because a thing seems difficult for you, do not think it impossible for anyone to accomplish.
Marcus Aurelius

Because trading seems difficult today, it was not for someone else. Stick with it the roles may reverse tomorrow.

Confine yourself to the present.
Marcus Aurelius

A trade is not connected to another, unless you let.

A man is never more truthful than when he acknowledges himself a liar.
Mark Twain

Not accepting a failure is to not learn from it.

A man’s character may be learned from the adjectives which he habitually uses in conversation.
Mark Twain

If you lose you are not necessarily a loser, if you call yourself a loser no one will be able to change your mind.

Against the assault of laughter nothing can stand.
Mark Twain

Don’t risk more than you cannot look at positively later.

A lie cannot live.
Martin Luther King, Jr.

Eventually you will run out of money if you run from your losses.

Everything that we see is a shadow cast by that which we do not see.
Martin Luther King, Jr.

You may not understand it fully right now but the market is always right.

He who hesitates is poor.
Mel Brooks

If you are thinking about getting out, your competition is already flat.

Always turn a negative situation into a positive situation.
Michael Jordan

A loss is only a loss if you lose the lesson.

I’ve failed over and over and over again in my life and that is why I succeed.
Michael Jordan

The view of trading changes after a loss it is your job to get it back to where it was.

The game is my wife. It demands loyalty and responsibility, and it gives me back fulfillment and peace.
Michael Jordan

If you do not respect the market it will not respect you.

I have found the paradox, that if you love until it hurts, there can be no more hurt, only more love.
Mother Teresa

If you understand and accept risk, you will never risk too much again.

If you can’t feed a hundred people, then feed just one.
Mother Teresa

It does not matter how successful you were today, it just matters that you were successful.

I realize that some of my anecdotes may appear conflicting but they are not to me. It is not up to me to convince you of their truths. It is your job to figure out how they apply to you.

Don't Try to Predict Your Own Behavior

  
Analysis, Education
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“It’s easy to see, hard to foresee.” ~ Ben Franklin

How often have you accurately predicted your reaction to emotion-provoking events in your life?

When the stock market gets volatile as it has been in recent weeks, I am reminded of the irrelevence of risk tolerance questionnaires.  If you’ve ever sat down with an investment advisor or financial planner, you’ve likely seen or heard the questions that try to predict how you might react in various stock market scenarios. 

For example: 

“If your investment portfolio were to fall by 20% in the course of one year, how would you react?  Would you A) Do nothing, B) Wait a few months to make a decision, or C) Sell your stocks immediately?” (more…)

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